Feds one step closer to an option for easing into retirement

Sen. Max Baucus, D-Mont., proposed the work-retirement hybrid. Sen. Max Baucus, D-Mont., proposed the work-retirement hybrid. J. Scott Applewhite/AP

The Senate on Wednesday passed an overhaul of highway and transportation programs that includes language allowing retirement-eligible federal employees to work part time to help pay for other government programs.

The chamber passed the $109 billion highway bill by a vote of 74-22, putting the ball in the House’s court. Among the more than 20 amendments considered during this week’s marathon voting in the Senate was a provision penned by Sen. Max Baucus, D-Mont., that would use the retirement flex plan to offset costs of economic development aid in rural counties.

Under the Baucus amendment, approved 82-16 last week, part-time employees would receive partial annuities and could earn additional retirement benefits proportional to the amount of time they work. In addition, older employees would be required to mentor younger new hires and help preserve agency knowledge.

Because many federal employees are nearing retirement, part-time work could pad federal coffers since agencies would not have to replace these employees entirely. The Office of Personnel Management included a similar proposal in its fiscal 2013 budget request. Easing older employees into retirement by offering a part-time work program would save the Obama administration $720 million during the next 10 years, according to White House estimates.

The Senate-passed transportation bill also included a provision that would reinstate parity between parking and mass transit subsidies for commuters, including federal employees.

The National Treasury Employees Union praised that provision, noting that encouraging the use of public transportation would cut down on pollution and congestion on the roads. “With gas prices going higher and higher, this makes more sense than ever,” NTEU President Colleen Kelley said in a statement.

Federal employee unions also applauded the Senate for rejecting a bid to extend the civilian pay freeze an additional year. but they opposed the Baucus phased-in retirement provision on principle. “What we really have a problem is using the savings that would come from that proposal to fund yet another program that’s unrelated to federal employees,” AFGE spokesman Tim Kauffman told Government Executive last week.

The most recent highway and transit legislation expires March 31. The bill now goes to the House, which could take up its own version or use the Senate’s. Leadership has acknowledged “internal Republican divisions” over the House’s highway transit offering, H.R. 7, and Speaker John Boehner, R-Ohio, has suggested the House might defer to the Senate’s transit bill.

In its current form, H.R. 7 is more harmful to federal workers than the Senate-passed measure. The most recent version of the House bill includes a proposal to eliminate the Federal Retirement Employees Retirement System annuity supplement and would change the annuity calculation for new federal hires from an average of their three highest salaries to a high-five average. It also would require workers to contribute a total of 1.5 percent more to their pensions over three years, beginning in 2013.

One union representative told Government Executive the pension offsets would be included when the House resumes debate next week. Another union source suggested that if pension provisions were included, the House would lose support from Democrats, whose backing might be needed to pass the rest of the bill.

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